Thanks Guys

So getting signature from tennant on back of photos is more important is more preferred than timestamp?

First off, thanks to all who answered I really appreciate it

Say I'm in the following situation with a PI loan:

Loan balance:  80K
Equity:              20K (i.e. built up via PI loan only – ignoring cap. growth)
Offset:              10K

2 months down the track I decide to turn this into an IP by switching to an IO loan (as from what I understand this signals to the ATO that your intentions for borrowing the money has changed and that it's now an IP – i.e. the balance owing is now fully tax deductable)

2 weeks later I decide to borrow to invest in a 2nd IP and wonders how to best utilise the offset balance attached to now IP loan
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Duckstar – LOC seems the common approach however how should I best utilise my offset balance of 10K? Should I dump it into the existing loan of 80K and then apply for LOC against the now 30K (20K + 10K) so I have more tax deductability potential (I've read this is called debt recycling from somewhere…not sure…) or should I leave it and use it to finance borrowing costs and prop. management fees?

Richard – Many thanks for replying to all my posts u r legend! In regards to offset, if I apply for a separate LOC loan is it possible to get a 2nd offset account? (i.e. still retain the one that's linked to the 'PPOR turn IP account')

Cheers

Event Horizon – pls consider the following example

Total House Value – $300K
Total Loan Remaining – $170K
Total Equity – $120K

If I were to borrow against the full equity amount (i.e. 120K) will the new figures be –

Total House Value – $300K
Total Loan Remaining – $300K
Total Equity – $0K

Sorry should've explained with an example at the start

Thanks

Hi All,

I really appreciate all the reponses. I've already called to get Gas and Electric connected on Settlement and was about to do the same for water until I saw dictem's response – thanks alot How silly would I have been!

Cheers,
Ken

G'day All,

First of all thanks for all you replies

Young Investor – I'm just starting out also and the way I calculate the percentage of my salary that goes into investing is (for -ve geared investment as in my case):

[ (Total Annual Expenses/12) – (Total Monthly Rent Income) ] * 100 / (Total Monthly Wage)

This may not be the correct way of calculating it but I just did what ever made sense to me at the time

L.A. Aussie – Thanks you once again. I've decided to increase my loan term to 30yrs to lower my repayments down to $1120 pcm which should loosen my net usable income to ~630 pw. Living expense shouldn't be a problem as I will living with me folks once the property is rented out – during this time I'm planning to save up for 2yrs (60K) which should give me enough for a down payment for another IP. Do you think this is feasible? Also what should I be expecting in terms of Property Management Fee and more importantly what is the main responsibility of a property manager apart from liasing with tennants?

Thanks,
Ken

Thanks Guys

Opportunity…- I think you're right about only being able to claim back interest that you paid only if the proprty is rented out (income producing). Either way I'm leaning towards a PI loan so that I'll own a property outright in a shorter period and once I have that I'll use the equity and IO loan for purchase of a IP. How does that sound?

Also in reagrds to Offset account, is it true that the mortgage interest is only reduced by the interest earned in the offset account and not the total balance?

For example if I had (assuming monthly repayments):

Offset Balance: $30,000
Interest earned: $70 for a particular month

Mortgage Loan: $200,000
Interest Rate: 10% p.a.

Loan Interest  Payable = ($199930 * .01)/12

Can anyone confirm? I've read another post in this forum which states otherwise, i.e. ($170,000 * .01)/12

Ken